A Shift/Share Analysis of Michigan Agriculture

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March 31, 2006 - Author: William A Knudson

Introduction

Briefly stated, a shift/share analysis studies changes over time in the level of production and percent of total output produced by a firm or a geographic area. In this case, Michigan’s level of output compared to the level of output in the U.S. analyzed. This paper considers most of the major agricultural commodities produced in the state. The largest sector that is not considered is nursery/landscape/turfgrass sector. This is due to the difficulty of obtaining consistent data from throughout the country for comparison. Due to gaps in the data set, turkey production is also not considered. In many respects, this paper is an update of MSU Staff Paper 00-34 Trends in Michigan Agriculture and Food Processing by Jake Ferris.

This paper will identify trends in affecting commodity based agriculture in Michigan. For example, if Michigan’s share of production is increasing at the same time the state’s production is increasing (augmentation), then the market trend is positive. Conversely, if Michigan’s share of production is declining while the state’s production is also declining (degeneration), the trends are negative. The analysis will look at two time periods 1980-2004, with a few exceptions such as dairy and commodities that lack data that go back to 1980, and the time period from 1995 to 2004. This allows for an analysis of 25 years which usually captures trends if they exist, and a ten year time period to determine if more recent trends have asserted themselves.

There are two things that this analysis does not do. The first is that the paper does not try to determine or “explain” the sources or causes of the trends. It only provides statistical evidence that the trends exist. The second thing this paper does not do is discuss the potential for developing specialty products or markets for entrepreneurs. This paper takes a commodity approach and looks at the overall trends. The existence of negative trends for some commodities may provide the rationale and impetus for producers, processors, and others, to change their focus away from traditional commodity markets to high value specialty markets that exhibit positive trends. The paper may also aid policymakers and others interested in determining what commodities have a bright future and commodities that are facing difficulties. This paper can also be used with the recent analysis of the economic impact of the agri-food system (Peterson, Knudson, Abate) as well as the opportunity assessments that can be found at http://www.aec.msu.edu/product/roa.htm, to give a complete picture of the status and
potential of Michigan’s agri-food system.

This paper will discuss the concept behind shift/share analysis and some of the implications of a changing level of production and market share of Michigan agricultural commodities. An actual analysis of major field crops, fruits, vegetables, and livestock products will follow. For the most part, Michigan is not a major producer of most agricultural commodities. However, there are exceptions such as tart cherries and cucumbers. The paper also includes an appendix which discusses the actual statistical findings that are used in the analysis.

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Tags: economic and market analysis

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